Performance appraisals - Introduction

 

Performance appraisal might be named as performance review, performance evaluation, performance assessment, performance measurement, employee evaluation, personnel review, staff assessment, service rating, in different organizations. Performance appraisal should be considered as a process not as an event (Russell, J. and Russell, L., 2009) with 4 main phases TEAM (Technical, Extended, Appraisal and Maintenance) approach (Kohli & Deb, 2008).

Performance appraisals are used to measure the effectiveness and efficiency of the employees in an organization (Aggarwal and Thakur, 2013). Even if an organization hires the employees with same qualification and experiences, employees are different from each to other due to social, cultural, and demographical factors. Attitudes to handle a work is different. There can’t be any organization without gathering information about the skills, knowledge, responsibilities, future targets and goals and past performance of each individual employee, those are the fundamental data to effectively manage any organization (Lawler III, Benson and McDermott, 2012).

According to Aggarwal and Thakur (2013) Performance appraisal consists of.

1.                  Reviewing past performance

2.                  Rewarding past performance

3.                  Goal setting for future performance

4.                  Employee development

 

Both the qualitative and quantitative measures can be used as performance measures in performance appraisals. Performance appraisal can be categorized in to two types, See the table 1 below. 

1.                  Traditional methods	2.                  Modern methods
Ranking Method	Management by Objectives (MBO)
Graphic Rating Scales	Behaviorally Anchored Rating Scale (BARS)
Critical Incident Method	Humans Resource Accounting
Narrative Essays	Assessment Centers
	360 Degree feedback
	720 Degree feedback

Table 1: Methods of Performance Appraisals (Aggarwal and Thakur, 2013)

 

 

History

It’s difficult to trace the actual origination of performance appraisal, however can be traced back to early 1800s when the UK cotton mills were owned by Robert Owen (Cappelli & Conyon 2018). Performance appraisal was done annual basis to assess the productivity of the employees. Rating score basis performance review has been started in 1920s. After the Hawthorne studies, performance appraisal focus was changed to assessing the personal traits and merit rating method was introduced. Assessing the personal traits method was not succeeded because the measures were very subjective and doubtful when predict the productivity of an employee. Post-1945, Management by Objectives (MBO) appraisal method became popular which was promoted by Peter F. Drucker. But MBO was subjective and inconsistent (Panda S., 2011).  In 1960s, self-appraisal by discussions, provided the opportunity for the employee to have a conversation with their managers about the performance. Effectiveness of the appraisal was dependent on the manager until a 360-degree feedback appraisal method was introduced in 1990s (Prowse, P. and Prowse, J., 2009).Then the 720-degree feedback appraisal method was introduced to have feedback from different sources (Aggarwal and Thakur, 2013).

 

The dilemma of performance appraisal

Performance evaluation is done though the feedback of one or multiple sources who closely work with the employee such as peers, subordinates, clients, supervisors. So, evaluation is biased and might have errors including Halo error, Leniency error, Severity error, Contrast error, Proximity error, Central Tendency error, Recency error (Javidmehr and Ebrahimpour, 2015). As per Goler, Gale & Grant (2016), more than 30 of fortune 500 companies have terminated using the performance reviews but employee ratings were done subjectively without formal performance reviews with the employee.

 

Performance appraisals are very important for effective management of the organization’s talent, but they are often criticized and poorly conducted. Even though the performance appraisal methods are criticized often, no one has suggested any other process that can provide feedback, develop motivation, identify training needs, and justify the reward (Prowse, P. and Prowse, J., 2009). The research by Lawler III, Benson and McDermott (2012) shows that performance control systems can be effective if they are properly designed and conducted. If not, it might be a waste of time of both the managers and subordinates. Further negatively impact on the relationship between the manager and subordinates. To avoid the appraisal rating errors, managers and subordinates should be trained properly. Also, the opportunity should be provided for the managers to enhance the employee relationship (Appelbaum, Roy and Gilliland, 2011).

References

• Aggarwal, A. and Thakur, G.S.M., 2013. Techniques of performance appraisal-a review. International Journal of Engineering and Advanced Technology (IJEAT), 2(3), pp.617-621.
• Appelbaum, S.H., Roy, M. and Gilliland, T., 2011. Globalization of performance appraisals: theory and applications. Management Decision.
• Cappelli, P. and Conyon, M.J., 2018. What do performance appraisals do?. ILR Review, 71(1), pp.88-116.
• Javidmehr, M. and Ebrahimpour, M., 2015. Performance appraisal bias and errors: The influences and consequences. International Journal of Organizational Leadership, 4, pp.286-302.
• Kohli A.S. & Deb T., 2008. Performance Management. First Edition, Oxford University Press,
• Lawler III, E.E., Benson, G.S. and McDermott, M., 2012. What makes performance appraisals effective?. Compensation & Benefits Review, 44(4), pp.191-200.
• Panda S., 2011. Performance Management System: Issues and Challenges. Management and Labour Studies. 36. pp 271-280.
• Prowse, P. and Prowse, J., 2009. The dilemma of performance appraisal. Measuring business excellence.
• Russell, J. and Russell, L., 2009. Ultimate Performance Management: Training to Transform Performance Reviews into Performance Partnerships. 1st ed. USA: ASTD Press.